Labour To Raise CGT On Shares While Protecting Buy-To-Let And Second Homes
Chancellor Rachel Reeves is expected to increase capital gains tax (CGT) on the sale of shares and other assets, but will leave the rate on second homes and buy-to-let properties unchanged.
Capital gains on share profits, currently at 20%, are expected to rise by several percentage points, with ministers considering additional measures to boost revenue, The Times reports.
The UK government aims to avoid austerity, with tax hikes and spending cuts contributing to plans to raise up to £40 billion. Revenues from the proposed capital gains tax increase could generate billions, primarily from the sale of unlisted shares in private companies.
However, experts caution that increasing tax rates without reforming the system could lead to economic inefficiency and lower revenues due to changes in taxpayer behaviour.
The Treasury is also said to be looking at reducing tax-free pension lump sums and targeting employer pension contributions to fill the budget gap. The tax-free allowance, which currently sits at £268,275, could be reduced to £100,000.